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The following parameters are for the national economy of Bangladesh for the year 2008 (in billion dollars). Assume no transfer payment. C = 100+0.75 YD
The following parameters are for the national economy of Bangladesh for the year 2008 (in billion dollars). Assume no transfer payment. C = 100+0.75 YD G = T =400 I = 200 Xn = 300-0.15Y a. Calculate the value of equilibrium income/expenditure? b. At equilibrium what is the amount of the budget deficit/surplus? c. What is the value of Xn at equilibrium? d. What is the value of marginal propensity to expend (MPE)? What is the value of multiplier in this economy? What factors will determine the increase in multiplier of this economy. e. Suppose government takes a fiscal policy of increasing both its spending (G) and autonomous taxes (T) by $80 billion. Calculate the new equilibrium income. f. Is this fiscal policy neutral? Can you explain this intuitively
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